Update on Federal Matching and Maintenance of Effort Requirements for California

Concern was expressed by the California congressional delegation as to the effect of Proposition 9 on the State's future ability to meet matching and maintenance of effort requirements for many federal grant programs. If this ballot initiative is passed, the California State income tax would be cut by 50 percent. The congressional delegation requested an updated version of the table on matching and maintenance of effort requirements included in an earlier GAO report and information on the amount of federal funds which flow into California under large programs with matching and maintenance of effort requirements.

GAO could not determine the effect of Proposition 9 on federal funds to California because federal funding is dependent on the actions of relatively independent factors. How the State and its local governments allocate anticipated budget cuts will determine whether federal matching and maintenance of effort requirements are met. Fifty-two grant programs available to California were identified that: (1) had national funding in excess of $100 million in fiscal year 1980; and (2) had matching and/or maintenance of effort requirements. Federal grant programs primarily available for schools of higher education, research institutions, and direct payments to individuals where State and local cost-sharing is not federally mandated were not included. Of the programs identified, 36 had nonfederal matching requirements, and 38 had maintenance of effort requirements. The total fiscal outlay during 1979 for these programs represented approximately 85 percent of California's total federal grant funds.